Role of digitization in banking

What is meant by digitization :-

Digitization is the process of converting data into digital format. Digitalization means the adoption of technology. But these two words are being used interchangeably.

Role of digitization in banking :-

Banks are not just a part of our lives, but have a significant role in our daily lives. For many, day will not end without at least a single financial transaction. Thus banks always try to adopt latest technologies to enhance customer experience.

Digitization is not an option for banking industry, rather it is inevitable because every industry is being digitized and banking sector is no exception.

Mobile banking is increasing at a fast pace more than online banking.

Advantages of digitization in banking :-

Improved customer experience.

Reduction of costs for banks and customers as well by using ATMs, cashless transactions etc.

With more digital data available with banks, they can take data-driven dynamic decisions by using digital analytics. This benefits both customers and banks.

Technology is non-discriminatory. Everyone will be treated same at banks.

Number of customers will be increased for banks because of the increased convenience of banking.

Digitalization reduces human error.

Need of handling large amounts of cash will be reduced.

Opening and maintaining bank accounts are never been this easier.

Repetitive tasks will be eliminated by automation.

Rural and urban gap will be eliminated.

With the increasing cashless transactions, fake currency threat will be reduced.

Productivity will be increased.

Disadvantages of digitization in banking :-

Digitalization reduces the effort of employees and hence results in loss of jobs.

Some bank branches may cease to exist with the increasing use of online banking.

Banks will be more vulnerable to cyber attacks.

Privacy may have to be compromised. No one can hide crores of rupees in banks and just act middle class. 😛

These disadvantages are just temporary. Loss of jobs will be compensated through creation of new jobs such as cyber security, research team for innovation in technology etc.

It’s not that banks are going to have less work, but it’s just that the role of retail banking sector changes.

Conclusion :-

With the increasing usage of smartphones, digitization of banking sector is inevitable to catch up the increasing expectations of the world. It indeed reduced human errors and increased convenience. But the fact that cyber threats are on the rise, banks must be very careful and should be prepared to handle cyber attacks.

Afterwords :- What is your stance on this topic? Express your thoughts in the comment section below.

13 comments

I am agreed with the Digitisation and the thing is we are adopting all technology and utilising that , but how much we can avoid or we can face if any threat may come is matters . We should adopt whatever change which will help to grow our Daily life style and at the same time we should improve our security systems also.

I would like to say that all the banks are striving hard to make their transactions digitalize to the customer on their fingertips.At the end of the day we all can make all our payments digitally without the help of any third person.Keeping in mind that many of the people in india are still illitrated who can’t navigate through the application so all the banks are making a simple and very easier environment at high security standards in which a common man can make it easy to use by some practice.

yes…it’s an evolution. and as we all know each and every evolution takes some time. so those disadvantages are surely temporary.. at first few will protest it but after some days they’ll accept it. so if there is an evolution rising then we all should support it. hence nothing will create any problem. and especially we youngsters should take the initiative steps to make it successful. so i don’t think there is any problem or dangerous disadvantages in it. if you are against it then once think about the previous evolution, demonetization. most people started protesting at first. but after few days everything was normal. so as of my point of view whatever makes life easier and errorless should be accepted. it may take some time, but it will definitely give us a developed lifestyle. and our country will surely be developed. 🙂 🙂 🙂

Digitisation also brings transparency so all the scams that happened in the past would be avoided.People would fear while taking bribe which leads to reducton in black money and ultimately it would lead India towards corruption free society.

but one whose age is 45 and more do you really think he/she will go for change and how much difficult it will be for him/her. the one who is skilled specialized in their zone, for them how they will be compensated…

Yes agree that many will lose their jobs but still digitalisation of banking sector by converting banking sector from paper to paperless is quite good for economy and it is a sign of development of banking sector as the economy will grow with the growth of banking sector it will indirectly generate more employment in the economy

like you have mentioned that the loss of jobs will be compensated by the creation of new jobs, but how is it possible for a person who sits at a counter in bank to facilitate the transaction to help those who got jobs in cyber security department. Both the sectors are entirely different and require completely different skill set. So it might be possible that those who have lost jobs may not be able to find new jobs.

it is not that the bankers will lose there jobs in banking rather there will be less job creation in the banking sector and the future job shift will be towards cyber security. banking is not possible without professional banker so yes there may be some lean period in banking but everything will be fine soon and no current employee have to learn anything new. It will be just job shift from one sector to another in future. Hope this helps ☺